Glossary · Compliance and regulation
An investment advisor's fiduciary duty under the Advisers Act comprises a duty of care and a duty of loyalty, together requiring a reasonable belief that the advice given is in the client's best interest, based on the client's objectives and full and fair disclosure of material facts.
The SEC set out its interpretation of the standard in 2019. Two points are commonly missed: cost is a factor an advisor must consider rather than assume, and the duty cannot be disclosed away by a blanket waiver.
It applies to the whole relationship, not to individual transactions — which is why documentation of the basis for advice matters as much as the advice.
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